Walmart
Scale plus screens: a cost-advantaged retailer compounding through omnichannel and advertising
Walmart remains a durable, low-cost retail platform with rising mix of higher-margin businesses such as retail media, marketplace, and memberships. Its scale-driven cost advantage and dense store network underpin resilience, while omnichannel capabilities are widening with strong eCommerce growth and store-fulfilled delivery.
The 2024 completion of VIZIO expands Walmart’s connected-TV reach and should accelerate Walmart Connect, supporting margin mix over time. Financially, the company generates robust operating cash flow and is intentionally investing heavily in automation, supply chain, and technology.
Trailing-twelve-month free cash flow through Q2 FY2026 is about 11.5 billion dollars (our build uses CFO minus capex from Q3 FY2025 to Q2 FY2026). Return on investment improved to roughly 15 percent in FY2025, with management continuing to prioritize high-return projects and a growing dividend.
The business is predictable and resilient, though pricing power is inherently limited by an EDLP strategy and razor-thin retail margins. We would own this business at a fair free cash flow multiple that offers a yield premium to the 10-year Treasury.
Does Walmart have a strong competitive moat?
Walmart’s moat is anchored in cost advantage and efficient scale: unparalleled purchasing power, a dense store base within short drive of most U.S. households, and a modernized supply chain enable consistently low prices with reliable in-stock.
Omnichannel execution (store-fulfilled pickup and delivery, eCommerce >20 percent growth across segments in Q2 FY2026) builds convenience-based switching costs. The ecosystem increasingly includes advertising (Walmart Connect), marketplace, financial services, health/wellness, and memberships (Walmart+, Sam’s).
The December 2024 VIZIO acquisition extends connected-TV reach, enhancing closed-loop retail media economics. Risks to the moat include intense competition (notably Amazon, club formats, dollar stores), regulatory scrutiny, wage inflation, and potential disruption if digital experiences lag.
Overall durability is high due to scale, data, and logistics, with growing intangible and network-like effects from the media and marketplace layers.
Does Walmart have pricing power in its industry?
By design, EDLP constrains overt pricing power in core retail, and consolidated operating margins remain thin. However, mix shift toward retail media, marketplace services, and memberships adds latent pricing power because these services carry higher incremental margins and can sustain price increases without meaningful churn.
Advertising grew 46 percent globally in Q2 FY2026 (U.S. Connect +31 percent), suggesting long runway. Still, given competitive intensity and consumer price sensitivity in grocery, we view pricing power as moderate but improving over time.
How predictable is Walmart's business?
Revenue is highly recurring and diversified across grocery, consumables, health/wellness, and general merchandise, with three scaled segments (Walmart U.S., International, Sam’s Club).
Multi-year comparable sales growth and omnichannel expansion have produced steady top-line increases (FY2025 total revenues ~681 billion dollars, +5.1 percent year over year). Subscription-like elements (Walmart+, Sam’s membership) and retail media add stability. Geographic dispersion reduces single-market risk, though U.S. remains the anchor.
Predictability is high for a retailer, aided by consistent execution and category mix.
Is Walmart financially strong?
TTM free cash flow is about 11.5 billion dollars despite elevated capex focused on automation and remodels. FY2025 operating cash flow was 36.4 billion dollars with capex 23.8 billion dollars.
Long-term debt was about 36.0 billion dollars at FY2025 year-end with laddered maturities and blended fixed rates near 4 percent; variable-rate exposure ~20 percent. Cash and equivalents were ~9 to 9.4 billion dollars as of January 31 and July 31, 2025. Interest coverage and access to CP/credit lines remain strong.
Overall balance sheet and liquidity support ongoing investment and returns to shareholders.
How effective is Walmart's capital allocation strategy?
Capital is prioritized to high-ROI growth: supply chain automation, store remodels/new units, and technology. FY2025 ROI was ~15.5 percent; management increased the dividend 13 percent for FY2026 to 0.94 dollars per share and continues repurchases.
The VIZIO acquisition strategically enhances retail media and is expected to be slightly EPS dilutive near term but attractive on IRR. We view the step-up in capex as strengthening the moat rather than merely maintaining assets. Execution discipline remains important to realize expected margin mix benefits.
Does Walmart have high-quality management?
CEO Doug McMillon and the experienced leadership team have executed a multi-year transformation toward omnichannel retailing, accelerated eCommerce, and higher-margin adjacencies. Governance and disclosures are robust, with a long track record of meeting commitments and navigating external shocks.
Insider-aligned culture and operational rigor are evident in steady ROI and cash generation through investment cycles.
Is Walmart a quality company?
Walmart is a good quality company with a quality score of 79/100
- Enduring cost advantage from unrivaled scale and logistics; omnichannel flywheel strengthens switching costs via pickup, delivery, marketplace, and memberships.
- Higher-margin mix is compounding: global retail media up 46 percent in Q2 FY2026 including VIZIO; Walmart Connect U.S. up 31 percent.
- TTM free cash flow ≈ 11.5 billion dollars despite elevated growth capex; ROI ~15 percent indicates disciplined investment.
- Balance sheet investment-grade with laddered maturities and diversified currencies; net debt manageable relative to operating cash flow.
- Valuation discipline: at a fair 25x TTM FCF, implied yield ~4.0 percent, comparable to the 10-year Treasury yield near 4.0 to 4.2 percent; patience warranted.
What is the fair value of Walmart stock?
Is Walmart a good investment at $115?
The following analysis is provided for informational and educational purposes only. It does not constitute financial advice, investment advice, or a recommendation to buy or sell any security. The opinions expressed are based on publicly available information and historical data. Beanvest and its contributors may hold positions in the securities mentioned. Investors should conduct their own due diligence or consult a licensed financial advisor before making any investment decision.